The Self-Employed In Bankruptcy

Filing for bankruptcy is a detailed process that often requires numerous documents about your financial situation. If you are self-employed you may lack the necessary documentation, making your case a bit more challenging.

A Paper Trail

The bankruptcy process requires proof of your income and previously paid taxes. Typically, the last 60 days of your paycheck, a current bank statement and the most recently filed tax return are required by your bankruptcy trustee in order to process your case. If you are self-employed or perform contract labor under a 1099 status, you may not be able to provide these documents.

What typically happens in the case in which you lack an official paycheck stub or tax return is to file an affidavit instead. The affidavit can serve in place of these documents, outlining the specifics of your financial situation. In order to be thorough enough for the filing, the affidavit should include the amount of income earned in the last 60 days and the status of the most recent tax return. For example, if you were not required to file a tax return, that should be indicated on the affidavit.  It may be helpful to include business transaction statements or personal bank statements to show any income paid to yourself over the last 60 days.